NOCIL LIMITED Investor Presentation Feb 2019
Safe Harbour This presentation and the accompanying slides (the Presentation ), which have been prepared by NOCIL Limited (the Company ), have been prepared solely for information purposes and do not constitute any offer, recommendation or invitation to purchase or subscribe for any securities, and shall not form the basis or be relied on in connection with any contract or binding commitment what so ever. No offering of securities of the Company will be made except by means of a statutory offering document containing detailed information about the Company. This Presentation has been prepared by the Company based on information and data which the Company considers reliable, but the Company makes no representation or warranty, express or implied, whatsoever, and no reliance shall be placed on, the truth, accuracy, completeness, fairness and reasonableness of the contents of this Presentation. This Presentation may not be all inclusive and may not contain all of the information that you may consider material. Any liability in respect of the contents of, or any omission from, this Presentation is expressly excluded. Certain matters discussed in this Presentation may contain statements regarding the Company s market opportunity and business prospects that are individually and collectively forward-looking statements. Such forward-looking statements are not guarantees of future performance and are subject to known and unknown risks, uncertainties and assumptions that are difficult to predict. These risks and uncertainties include, but are not limited to, the performance of the Indian economy and of the economies of various international markets, the performance of the industry in India and world-wide, competition, the company s ability to successfully implement its strategy, the Company s future levels of growth and expansion, technological implementation, changes and advancements, changes in revenue, income or cash flows, the Company s market preferences and its exposure to market risks, as well as other risks. The Company s actual results, levels of activity, performance or achievements could differ materially and adversely from results expressed in or implied by this Presentation. The Company assumes no obligation to update any forward-looking information contained in this Presentation. Any forward-looking statements and projections made by third parties included in this Presentation are not adopted by the Company and the Company is not responsible for such third party statements and projections. 2
9MFY19 - Consistent Financial Performance Revenue from Operations* Operating EBITDA Profit after Tax Rs. In Crores 968 83% of FY18 Revenue achieved 263 88% of FY18 EBITDA achieved 169 88% of FY18 PAT achieved 716 742 276 801 85 231 51 148 178 191 538 551 692 139 38 101 159 40 120 178 78 23 55 97 21 76 118 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 FY16 FY17 FY18 FY19 Q4 9M * Revenue from operations is net of GST/Excise duty 3
9MFY19 - Improving Operational Performance Value Additions** Operating EBITDA Margins PBT Margins 49% 52% 54% 56% 26% 29% 26% 28% 22% 21% 19% 16% 9MFY16 9MFY17 9MFY18 9MFY19 9MFY16 9MFY17 9MFY18 9MFY19 9MFY16 9MFY17 9MFY18 9MFY19 **(Revenue (-) cost of raw materials consumed (-) cost of traded goods (-) change in inventories)/revenue 4
Revenue Analysis and Break-up Revenue Growth Bridge Geography-wise Revenue mix Rs. In Crores 801 Domestic Exports 713 29% 9MFY19 9MFY18 Volume Growth Value Growth 9MFY19 Growth in Revenue was equally contributed by Volume & Value growth: 71% Volume growth Robust demand Value growth Better product mix 5
Q3FY19 Continued uptrend in Performance Revenue from Operations* Value Additions** Operating EBITDA Rs. In Crores 249 261 134 144 70 73 170 177 89 93 36 39 Q3FY16 Q3FY17 Q3FY18 Q3FY19 Q3FY16 Q3FY17 Q3FY18 Q3FY19 Q3FY16 Q3FY17 Q3FY18 Q3FY19 Value Additions** Operating EBITDA Margins 52% 52% 54% 55% 21% 22% 28% 28% Q3FY16 Q3FY17 Q3FY18 Q3FY19 Q3FY16 Q3FY17 Q3FY18 Q3FY19 * Revenue from operations is net of GST/Excise duty **Revenue (-) cost of raw materials consumed (-) cost of traded goods (-) change in inventories 6
Business Overview
Company Overview Part of Arvind Mafatlal Group Expertise in Rubber Chemical Business over 4 decades Largest Rubber Chemicals Manufacturer in India Long Term Business Relationships with Tyre Majors (Both Domestic & International) Awarded Responsible Care Logo by Indian Chemical Council Revenue * EBITDA * PBT * Dividend Payout more than 5 years +15 % +66 % +42 % ~30 % * CAGR growth from (FY13-FY18) 8
Management Team Mr. Hrishikesh. A. Mafatlal Promoter & Chairman Executive Chairman and Promoter Director of NOCIL Ltd B.Com. (Hons.) & has attended the Advanced Management Programme at the Harvard Business School, USA Mr. S. R. Deo Managing Director M. Tech. in Chemical Engineering from IIT Kanpur Associated with the company for nearly 40 years in various technical capacities Mr. R. M. Gadgil - President - Marketing B Tech in Chemical Engineering from IIT Mumbai Associated with the Company in various marketing capacities for nearly 37 years Mr. P. Srinivasan Chief Financial Officer Chartered Accountant with over 30 years of experience Associated with the Company since 2005 Dr. Chinmoy Nandi - Vice President (Research & Development) Post Graduate & Ph.D. in Science Associated with the company for nearly 35 years in various R&D capacities Dr. Narendra Gangal Vice President (QA, Analytical & Outsourced Research) Ph.D. in Analytical Chemistry with 27 years of experience Associated with the company since 2007 Mr. Rajendra Desai Vice President (Operations, Corporate HR & Personnel) Chemical Engineer with Diploma in Management Studies Associated with the company for nearly 34 years 9
Glimpse of our Plants Navi Mumbai Plant Dahej Plant Set up in 1976 Located in Trans-Thane Creek industrial area at Navi Mumbai, Thane - Belapur s industrial zone designated for the chemical Industry, about 40 kms away from Mumbai State-of-the-art technology for the manufacture of the entire range of Rubber Chemicals for Tyre & other Rubber Products Commercialized operation in March 2013 Located about 45 kms from Bharuch, Gujarat Location has synergistic Chemicals & Petrochemicals industry and excellent connectivity with Dahej & Hazira Port Fully automated continuous process plant developed completely with in-house technology 10
Our Value Proposition 01 01 Products & Product Forms Wide Range of Rubber Chemical Products Varied Product Forms Long Term Relationships with Customers over 40 Countries 02 Sales, Marketing & Technical Service Market Responsive Approach Strong MTS Team to offer Technical Services 03 02 03 R & D and Quality Assurance Experienced, capable & innovative team of R & D scientists. Ultra Modern Laboratories & Pilot Plant Facilities Latest Analytical Instruments 11
Products & their Usage 1 2 3 ACCELERATORS Increase the speed of vulcanization Permit vulcanization to proceed at lower temperature & with greater efficiency ANTI-DEGRADANTS/ ANTI-OXIDANTS This An ingredient in rubber compounds which deters the ageing or inhibits degradation due to oxygen attack of rubber products thereby enhancing service life Chemical compound can be used as a stabilizer in rubbers, etc. SPECIALISED APPLICATIONS Pre vulcanization inhibitor, Post vulcanization stabilizer, Zinc based applications etc. Improves Thermal Stability of cross links in rubber products ONE STOP SHOP With WIDE RANGE to suit MARKET REQUIREMENTS 12
R&D and Total Quality Management Research & Technology Development NOCIL s Research Centre is recognized by Ministry of Science and Technology, Government of India Key Areas Focussed upon Process Development, scale up, commercial implementation Environmental strategies for sustainable growth Research initiatives as per customers perceived needs Quality Assurance Quality Management System with a focus on Quality of Raw materials, Finished Products as well as in Process Sample Analysis The Quality Control Laboratory operates round the clock and is equipped with the latest Analytical Instruments & Equipment's Certifications ISO 9001:2008 ISO 14001:2004 BS OHSAS 18001:2007 ISO/IEC 17025:2005 ISO/TS16949:2009 IATF NABL Responsible Care by Indian Chemical Council 13
Technology & Speciality Chemicals Moving up the curve Key Factors Overall Improvement in Margin Profile of the Company Technology Improvement in Product & Processes Strong position in Highvalue added products 42% 46% 50% 52% 55% 56% 35% R&D Capabilities leading to significant reduction in cost of production Favourable Business conditions Operating leverage due to scaling-up of business Anti-dumping duty protection 10% 4% 4% 4% 16% 19% 8% 11% 21% 14% 27% 17% 29% 19% Sustainable Initiatives taken over 5 years Financials are on Standalone basis and FY17,FY18 and 9MFY19 are as per Ind AS FY13 FY14 FY15 FY16 FY17 FY18 9MFY19 EBITDA (%) Value Addition (%) PAT (%) 14
Rubber Chemicals Industry Trends High Performance Tyres Extended life, Automotive & Industrial products will increase rubber processing chemical loadings Stringent Environmental compliance Cost increase in China leading to Better level playing field Rising Income Levels Increase in Motor vehicle ownership rates, especially in developing nations would need additional consumption of rubber processing chemicals Global Demand * For Rubber processing chemicals continue to forecasted to grow around 4% - 5% for next 10 years *Source : Freedonia Report 15
Future Growth Opportunities Global Tyre Industry have already committed $10 Bn comprising of: 100 Mn tyres comprising of Car/ bus/ truck tyres Global Market Continuous Demand for Rubber Chemicals Indian tyre industry may grow 7%-9% over the next 5 years backed by favourable outlook for the domestic Automotive Industry Domestic Tyre Industry have already committed INR 15 18 Bn towards expansion plans Domestic Market Source - ICRA Source : ATMA - Indian Tyre Industry Report & Tire Business (Aug 18) 16
Positive Demand Forecast Global Rubber Consumption (Natural + Synthetic) In Lakh tonnes 291.3 8.2 8.5 Rubber Chemicals constitute 3% - 4% of the Rubber Consumption 255.8 7.6 4.6 6.6 Every year ~40k additional demand for Rubber chemicals is created 2013 2014 2015 2016 2017 2018* Total *Annualised data Source : Rubber Statistical Bulletin, Oct - Dec 2018 edition 17
Phase I Phase II CAPEX Key Growth Driver Phase I Rs. 170 crores ^ Phase I (a) - Expansion at Navi Mumbai has been commissioned and the commercial production have started from Q1 FY18-19 Phase I (b) Expansion at Dahej is has been commissioned after successful trial runs from Dec 18 Phase II Total Capex of Rs. 255 crores ^ For expansion of its production facilities for Rubber Chemicals (including intermediates captively consumed towards manufacture of rubber chemicals) at Dahej/Navi Mumbai (Announced in Dec 17) For expansion of its production facilities for Rubber Chemicals at Dahej/Navi Mumbai - (Announced in Jan 18) The above capex is expected to commence the commercial production by the end of Sept- Oct 19 Expansion is expected to give an Asset Turnover of 2X Total Capex of Rs. 425 crores - Significant portion will be funded by Internal Accruals Capex done to capitalize on growth opportunities Further scope of multiple expansion possible ^ as per FY18 prices 18
Why NOCIL is a Supplier of Choice Non-Chinese Dependable Player Non-Chinese Dependable & Quality Player with Committed Plans for future growth Environment Friendly Processes Continuous investments done to adopt various innovative environmental technologies for long-term sustainability Pipeline of New Generation of Rubber Chemicals Development of Niche products using innovative technologies & Green chemistry concepts and new generation environmentally sustainable processes for growth 00 Wide Range of Product Presence across the entire range of Rubber chemicals i.e. 22 product basket Product Testing & Validation Approved & registered vendor with all the Major Domestic & International Tyre Players offering Technical Support to customers for Rubber Products / Process Development Entry Barrier Customers take from 6-18 months to give approval for a specific location under specific climatic conditions & same is carried out for various locations globally 19
Profit & Loss Statement Rs. In Crores Q3 FY19 Q3 FY18 Y-o-Y 9M FY19 9M FY18 Y-o-Y Net Revenue from Operations * 261 249 4.8% 801 692 15.8% Raw Material 117 115 356 319 Value Addition ** 144 134 6.9% 445 373 19.4% Value Addition % 55.0% 53.9% 55.6% 53.9% Employee Expenses 15 16 50 50 Other Operating Expenses 56 49 164 144 Operating EBITDA 73 70 4.2% 231 178 29.7% EBITDA Margin 27.8% 27.9% 28.9% 25.8% Depreciation 6 4 17 12 Other Income 2 3 8 11 EBIT 69 69 0.1% 222 178 25.1% EBIT Margin 26.4% 27.6% 27.7% 25.7% Interest 0 0 0 1 Profit Before Tax 69 69 0.5% 222 177 25.6% Tax 24 24 74 59 Net Profit 45 45-0.7% 148 118 26.1% Net Profit Margin 17.1% 18.0% 18.5% 17.0% *Revenue from operations is net of GST/Excise duty **Revenue (-) cost of raw materials consumed (-) cost of traded goods (-) change in inventories 20
For further information, please contact: Company : Investor Relations Advisors : NOCIL Ltd. CIN: L99999MH1961PLC012003 Mr. P. Srinivasan - CFO finance@nocil.com www.nocil.com Strategic Growth Advisors Pvt. Ltd. CIN: U74140MH2010PTC204285 Ms. Payal Dave / Ms. Neha Shroff payal.dave@sgapl.net / neha.shroff@sgapl.net +91 9819916314 / +91 7738073466 www.sgapl.net